The economic cost of not being a white male

[136or142]

Vivienne Ming  should also analyze compensation patterns  in the NBA to discern economic cost (both in opportunity and direct compensation costs) to derive the economic cost of not being a Black male.

I'm not sure what point you're trying to get at.  But, in so far as the recent two time league MVP was the  non Black Steve Nash, I think you're going to have to actually show some evidence that black players have an easier time of it in the NBA, if that's the point you are trying to get at.

However, whatever point you are trying to make, it is a distraction from the point brought up in the research that I've posted on.

I guess the point I am trying to make is that Vivienne Ming should really consider the fact that compensation are set by market forces which is determined the economic value of the labor produced.  If she believes that being of a certain race gender or sexual orientation leads to lower compensation then she is really saying is the the market is mis-pricing the labor value of these certain demographic categories, in this case in the IT field.  If so the best way Vivienne Ming should react is not to produce such a report but to form a company that will hire these programmers or would be programmers whose labor value are mis-priced in the market which would include women URM and LGBT developers or would be developers .  While such a IT firm would not be another google or yahoo it would be quite profitable given the much lower labor costs it will pay relative to its peers.  I do not know much about Vivienne Ming but she seems quite a capable person and should be able to pull this off.  In fact I think she is a fool for producing this report. If anyone found a certain asset be if financial, or in this case labor value, to be under priced, the first logical reaction should to be scoop up said asset as the below fair market value before anyone else find out about it.  It is quite foolish of her to publish such a survey alerting others to such a possible under-pricing of said labor value.  

Of course if we are talking about IT I do not know why Vivienne Ming is so focused on White Males.  Asian Males are even more over-represented than White Males in the IT industry.  Even if Asian Males are less over-represented in IT upper management roles which are even higher paying (I myself would be an exception here) they are still well over-represented in IT upper management roles relative to their share of the population.  So I do not know why she focus so much no the "cost" of not being a straight White Man and instead talk about the "cost" of not being a straight Asian Man.

I don't worship free markets as much as you obviously do.

Jaichind does have a point. It always strikes me as a little implausible that every ruthless capitalist in this world would be willing to walk away from that much free money just to satisfy their bigotry. I mean, there might be some such people but it would only take one or two evil capitalists prioritizing their own profits instead of their ideological committment to racism or sexism to fix the wage gap, if it was solely about that.

The existence of discrimination has been confirmed by multiple CV studies in many countries. But I would exercise caution in generalizing the impact of that on the macro level.

Milton Friedman made the same argument that Jaichind did.  The problem is is that behavioral economics has largely overturned his ideas since then.

Although I have no doubt that Milton Friedman knew that racism was real, when it came to sexism his view was likely that of 'we know that irrational economic behavior exists, but these irrational acts cancel each other out.'  Since then though, behavioral economics has shown that in many cases where irrational economic behavior exists, most people behave irrationally in the same way.  So, the idea that some employers would discriminate against men, while others would discriminate against women (I'm sure Friedman would never have argued that the discrimination would have been even) and that it would more or less cancel out, has been disproven.

More importantly, the concept of subtle racism or subtle sexism is also now well established.  The idea that hiring managers may not be racist or sexist, but even if they aren't aware of it, they are more likely to hire the type of people like them or that they've grown up with, or gone to university with.

So, Friedman, and by extension Jaichind are simply wrong.

On the final point, a business can engage in racism and sexism for a long time if the costs aren't prohibitive or if nearly every other business they compete with does the same thing.  In a market with perfect competition they probably couldn't do it for long, but most industries aren't perfect competition.  I agree with you and Jaichind that in the long run markets will eliminate this sort of behavior due to competitive forces, but as Keynes said "in the long run, we're all dead."

[jaichind]

Milton Friedman made the same argument that Jaichind did.  The problem is is that behavioral economics has largely overturned his ideas since then.

Although I have no doubt that Milton Friedman knew that racism was real, when it came to sexism his view was likely that of 'we know that irrational economic behavior exists, but these irrational acts cancel each other out.'  Since then though, behavioral economics has shown that in many cases where irrational economic behavior exists, most people behave irrationally in the same way.  So, the idea that some employers would discriminate against men, while others would discriminate against women (I'm sure Friedman would never have argued that the discrimination would have been even) and that it would more or less cancel out, has been disproven.

More importantly, the concept of subtle racism or subtle sexism is also now well established.  The idea that hiring managers may not be racist or sexist, but even if they aren't aware of it, they are more likely to hire the type of people like them or that they've grown up with, or gone to university with.

So, Friedman, and by extension Jaichind are simply wrong.

On the final point, a business can engage in racism and sexism for a long time if the costs aren't prohibitive or if nearly every other business they compete with does the same thing.  In a market with perfect competition they probably couldn't do it for long, but most industries aren't perfect competition.  I agree with you and Jaichind that in the long run markets will eliminate this sort of behavior due to competitive forces, but as Keynes said "in the long run, we're all dead."

I do not know exactly Friedman's position on this topic so I will stay away from that.  My primary point has nothing to do with who is right or wrong on this because choosing the right employee is a chaotic and complex subject which is hard even without all these possible conscious or unconscious biases.   My main point is how Vivienne Ming should react to what she feels she has discovered.  in short, Show Me the Money.  She should form an IT company, apply many of the practices that might lead to  unconscious biases (like remove names on resumes) and doing an interview completely online without a visual or audio signal and target these specific demographic groups.  Such a firm should produce greater profit due to lower labor costs.  She is the one that put a dollar value on how these demographic groups are underpaid so the burden of proof should be on her to show such a profit.  I am sure various VC firms who review her data and are convinced of her research will be glad do  dump money into such a venture.  What she is doing sounds a lot like this professor of finance I hired about 10 years ago to give my team training in finance to augment their IT skills.  While his lectures were very good he keeps on harping on how Gold was way undervalued.  My reaction was "If you are so sure you are right why are you lecturing us on it, why not go buy Gold and make the megabucks instead of being paid to lecture us."

On a secondary point.  I have no issues of being open to  unconscious biases being a factor.  And I never took the position that somehow these biases cancel each other out.  The only way to measure that would be to do what I suggest in the primary point.  I would say that there are data that seem to point to the fact that these biases (conscious or  unconscious) do not have that much impact all things equal.  Lets take IT which is what  Vivienne Ming is talking about.  The demographic profile (at least in USA) of people who work in IT seems suspiciously similar  to  the demographic profile of the group of people that score in the top 1% of the Math section of SAT/ACT.  Meaning large over-representation of Asians and large under-representation of URM plus large under-representation of females.  Again not clear why  Vivienne Ming does not talk about the "cost" of not being a straight Asian Man.  Since I brought up the topic of NBA the same logic applies there.  The demographic profile of the NBA seems suspiciously similar  to  the demographic profile of the top 1% of high school basketball players.   One extreme data point would be the AMC high school math competition which I follow since I did a lot of competition math back in high school.  Out of the top 1100 students in this competition who made it into the honor roll in early 2016 about 60% had Chinese last names and another 15% had South Asian last names while the male-female ratio is about 10 to 1.   I know there are counter-arguments for this as well (different cultural expectations, stereotype threat etc etc) but the scores are the scores and they do contain data as a reference of comparison.

Now I would also add that there are actually rational reasons to have biases (conscious or unconscious) on top of a chaotic process of hiring.   That is this to deal with legal risk. If someone from a particular demographic group are more likely to sue (as seen in empirical legal data on race gender and race of people that sue) for being let go or not being promoted then there is a rational argument that a firm should reduce legal risk by not taking on those employees and incur legal cost of documenting every aspect of performance management in order to guard against a future lawsuit.    

[136or142]

I  Lets take IT which is what  Vivienne Ming is talking about.

1.Vivienne Ming already has a full time job.  

2.Vivienne Ming was not just referring to discrimination in IT hiring at all: Ming — who is herself transgender —  spent three years meticulously calculating the financial opportunity costs of social difference by gathering data from 100 different websites and coding 55,000 variables based on salary, occupation and other factors.

[jaichind]

I  Lets take IT which is what  Vivienne Ming is talking about.

1.Vivienne Ming already has a full time job.  

2.Vivienne Ming was not just referring to discrimination in IT hiring at all: Ming — who is herself transgender —  spent three years meticulously calculating the financial opportunity costs of social difference by gathering data from 100 different websites and coding 55,000 variables based on salary, occupation and other factors.

Hmm.  Perhaps I misread it but the link that was provided

http://www.cbc.ca/radio/day6/episode-277-veterans-and-pot-the-case-for-a-robot-president-dolphin-soldiers-and-more-1.3495805/the-other-tax-societal-privilege-and-the-cost-of-being-different-1.3495838

has "By her estimate, women in the U.S. tech industry face a lifetime opportunity cost of up to $300,000, while being a gay man in the U.K. can cost up to $54,000. "

And if you drill into another link within that article

http://qz.com/631455/a-scientist-cacluated-the-cost-of-not-being-a-straight-man-and-she-wants-a-tax-cut/

which has

"When she was chief scientific officer at Gild, a workforce-science company, Ming and her team tried to deconstruct what made a successful programmer, looking for whether his or her code got reused, how other programmers rated it, and other variables. They scraped data from 100 different websites like LinkedIn, Facebook, and Bitbucket, taking in 55,000 variables such as what seemed to motivate people (gleaned from social media), what sort of jobs they got, and how much money they made."

So it seems she is just focusing on IT/programmer role where as I mentioned before Asians are way more underrepresented than Whites.  I guess I have to wear my Asian Male Privilege Badge proudly  

Anyway, on the other point.  I get she has a job already.  My view is that whatever research she has done I would view as unproven unless she or some other entity uses her research and proves it out in an IT shop.  Just like that finance professor that keeps on giving lectures on how Gold is undervalued and that we should all buy Gold, unless he or someone using his methodology makes abnormal profits in Gold trading I would view such claims as unproven.  Not necessary wrong as I do view this entire process as very complex system so nothing can be wrong, but unproven.

[136or142]

I  Lets take IT which is what  Vivienne Ming is talking about.

1.Vivienne Ming already has a full time job.  

2.Vivienne Ming was not just referring to discrimination in IT hiring at all: Ming — who is herself transgender —  spent three years meticulously calculating the financial opportunity costs of social difference by gathering data from 100 different websites and coding 55,000 variables based on salary, occupation and other factors.

Hmm.  Perhaps I misread it but the link that was provided

http://www.cbc.ca/radio/day6/episode-277-veterans-and-pot-the-case-for-a-robot-president-dolphin-soldiers-and-more-1.3495805/the-other-tax-societal-privilege-and-the-cost-of-being-different-1.3495838

has "By her estimate, women in the U.S. tech industry face a lifetime opportunity cost of up to $300,000, while being a gay man in the U.K. can cost up to $54,000. "

And if you drill into another link within that article

http://qz.com/631455/a-scientist-cacluated-the-cost-of-not-being-a-straight-man-and-she-wants-a-tax-cut/

which has

"When she was chief scientific officer at Gild, a workforce-science company, Ming and her team tried to deconstruct what made a successful programmer, looking for whether his or her code got reused, how other programmers rated it, and other variables. They scraped data from 100 different websites like LinkedIn, Facebook, and Bitbucket, taking in 55,000 variables such as what seemed to motivate people (gleaned from social media), what sort of jobs they got, and how much money they made."

So it seems she is just focusing on IT/programmer role where as I mentioned before Asians are way more underrepresented than Whites.  I guess I have to wear my Asian Male Privilege Badge proudly  

Anyway, on the other point.  I get she has a job already.  My view is that whatever research she has done I would view as unproven unless she or some other entity uses her research and proves it out in an IT shop.  Just like that finance professor that keeps on giving lectures on how Gold is undervalued and that we should all buy Gold, unless he or someone using his methodology makes abnormal profits in Gold trading I would view such claims as unproven.  Not necessary wrong as I do view this entire process as very complex system so nothing can be wrong, but unproven.

I believe that was the start of her research, but she broadened it out to more than just IT.

She also did this:
She compiled a database of entrepreneurs, tracing where they were based, how much money they raised, and how many jobs they created. Over the past 10 years, LGBT entrepreneurs created 3 million jobs after they moved from less inclusive places—think Dallas—to more inclusive places, like New York. Ming points out that Republican politicians in the US love to extol the virtues of less regulation and lower taxes; yet these entrepreneurs chose to move to more heavily-taxed places with stricter regulations but better attitudes towards diversity and inclusion.

All hypothesis are unproven until they are tested, but that doesn't mean that all hypothesis are equal. If, as I've written above, you combine her research with other research, some anecdotal, some more so, I think it all combines into a pretty strong case.

[136or142]

I do not know exactly Friedman's position on this topic so I will stay away from that.      

Milton Friedman wrote about it in his book "Capitalism and Freedom."  It's in his chapter on hiring discrimination.

I have the book and since you might be interested in it I can send it to you if you like.

If you're interested you can send me a private message and I'm sure we could figure something out.  I don't care about the mailing charges or anything.

I have a lot of economics books that I've been trying to give to people who I think might be more interested in them or who might be able to make more use of them than me.  Basic utility theory.

[TheDeadFlagBlues]

To be blunt, the reason why economists are wrong about discrimination is that they either see discrimination as the result of an information problem or the result of some kind of preference. In either case, there is a incorrect evaluation that ought to be corrected by market forces. In reality, discrimination has little to do with some economic agent not recognizing an employee's "true" value in the workforce: discrimination is the result of social forces acting upon individuals and making them less capable than others or making them believe that they are less capable than others. In this regard, SAT scores are virtually useless: yes, Asians perform much better on SAT scores than other racial groups but there are reasons why this is the case and it's not due to some immutable genetic factor or cultural superiority. East Asian households tend to be more stable than White households, migrants from east Asia tend to have higher levels of educational attainment than immigrants from other countries and there are cultural reasons that dispose them towards excelling at standardized tests and mathematics. Russians tend to be much better at math because most bright Soviets, who would have been social scientists or historians elsewhere, were shoved into mathematics and physics so their math pedagogy is stronger. Why am I referencing these rough explanations? Because they serve as evidence that the differences that exist between ethnicities are the result of social forces that are mutable. If we know that could reduce levels of racial inequality or economic inequality and fail to act on this knowledge, I'd argue that this constitutes a kind of discrimination.

I don't know if this is a clear or coherent point but, based on what I can tell, economics is effectively useless on this subject because the determinants of discrimination lie outside of the purview of economics. There are trade-offs in every social science: economists have become very adept at working with quantitative data but, as a result, they're increasingly out of touch with the empirical underpinnings of social science. There are assumptions behind the assumptions that economists employ and they're painfully unaware of those assumptions.

[Gustaf]

Vivienne Ming  should also analyze compensation patterns  in the NBA to discern economic cost (both in opportunity and direct compensation costs) to derive the economic cost of not being a Black male.

I'm not sure what point you're trying to get at.  But, in so far as the recent two time league MVP was the  non Black Steve Nash, I think you're going to have to actually show some evidence that black players have an easier time of it in the NBA, if that's the point you are trying to get at.

However, whatever point you are trying to make, it is a distraction from the point brought up in the research that I've posted on.

I guess the point I am trying to make is that Vivienne Ming should really consider the fact that compensation are set by market forces which is determined the economic value of the labor produced.  If she believes that being of a certain race gender or sexual orientation leads to lower compensation then she is really saying is the the market is mis-pricing the labor value of these certain demographic categories, in this case in the IT field.  If so the best way Vivienne Ming should react is not to produce such a report but to form a company that will hire these programmers or would be programmers whose labor value are mis-priced in the market which would include women URM and LGBT developers or would be developers .  While such a IT firm would not be another google or yahoo it would be quite profitable given the much lower labor costs it will pay relative to its peers.  I do not know much about Vivienne Ming but she seems quite a capable person and should be able to pull this off.  In fact I think she is a fool for producing this report. If anyone found a certain asset be if financial, or in this case labor value, to be under priced, the first logical reaction should to be scoop up said asset as the below fair market value before anyone else find out about it.  It is quite foolish of her to publish such a survey alerting others to such a possible under-pricing of said labor value.  

Of course if we are talking about IT I do not know why Vivienne Ming is so focused on White Males.  Asian Males are even more over-represented than White Males in the IT industry.  Even if Asian Males are less over-represented in IT upper management roles which are even higher paying (I myself would be an exception here) they are still well over-represented in IT upper management roles relative to their share of the population.  So I do not know why she focus so much no the "cost" of not being a straight White Man and instead talk about the "cost" of not being a straight Asian Man.

I don't worship free markets as much as you obviously do.

Jaichind does have a point. It always strikes me as a little implausible that every ruthless capitalist in this world would be willing to walk away from that much free money just to satisfy their bigotry. I mean, there might be some such people but it would only take one or two evil capitalists prioritizing their own profits instead of their ideological committment to racism or sexism to fix the wage gap, if it was solely about that.

The existence of discrimination has been confirmed by multiple CV studies in many countries. But I would exercise caution in generalizing the impact of that on the macro level.

Milton Friedman made the same argument that Jaichind did.  The problem is is that behavioral economics has largely overturned his ideas since then.

Although I have no doubt that Milton Friedman knew that racism was real, when it came to sexism his view was likely that of 'we know that irrational economic behavior exists, but these irrational acts cancel each other out.'  Since then though, behavioral economics has shown that in many cases where irrational economic behavior exists, most people behave irrationally in the same way.  So, the idea that some employers would discriminate against men, while others would discriminate against women (I'm sure Friedman would never have argued that the discrimination would have been even) and that it would more or less cancel out, has been disproven.

More importantly, the concept of subtle racism or subtle sexism is also now well established.  The idea that hiring managers may not be racist or sexist, but even if they aren't aware of it, they are more likely to hire the type of people like them or that they've grown up with, or gone to university with.

So, Friedman, and by extension Jaichind are simply wrong.

On the final point, a business can engage in racism and sexism for a long time if the costs aren't prohibitive or if nearly every other business they compete with does the same thing.  In a market with perfect competition they probably couldn't do it for long, but most industries aren't perfect competition.  I agree with you and Jaichind that in the long run markets will eliminate this sort of behavior due to competitive forces, but as Keynes said "in the long run, we're all dead."

I do a lot of behavioral economics but the question here is one of magnitude. I'm not saying there is no discrimination. The question is whether it can be a huge driving force. That would require a lot of market imperfection that seems implausible, especially in a field like IT startups.

To DeadFlag, sure, I think you have a point, but to me that isn't discrimination exactly. Or, rather, I don't think your point is a defense of the position being criticized here which does have to do with manager decisions rather than structural reasons some people perform worse, internalize other norms, etc.

[136or142]

Vivienne Ming  should also analyze compensation patterns  in the NBA to discern economic cost (both in opportunity and direct compensation costs) to derive the economic cost of not being a Black male.

I'm not sure what point you're trying to get at.  But, in so far as the recent two time league MVP was the  non Black Steve Nash, I think you're going to have to actually show some evidence that black players have an easier time of it in the NBA, if that's the point you are trying to get at.

However, whatever point you are trying to make, it is a distraction from the point brought up in the research that I've posted on.

I guess the point I am trying to make is that Vivienne Ming should really consider the fact that compensation are set by market forces which is determined the economic value of the labor produced.  If she believes that being of a certain race gender or sexual orientation leads to lower compensation then she is really saying is the the market is mis-pricing the labor value of these certain demographic categories, in this case in the IT field.  If so the best way Vivienne Ming should react is not to produce such a report but to form a company that will hire these programmers or would be programmers whose labor value are mis-priced in the market which would include women URM and LGBT developers or would be developers .  While such a IT firm would not be another google or yahoo it would be quite profitable given the much lower labor costs it will pay relative to its peers.  I do not know much about Vivienne Ming but she seems quite a capable person and should be able to pull this off.  In fact I think she is a fool for producing this report. If anyone found a certain asset be if financial, or in this case labor value, to be under priced, the first logical reaction should to be scoop up said asset as the below fair market value before anyone else find out about it.  It is quite foolish of her to publish such a survey alerting others to such a possible under-pricing of said labor value.  

Of course if we are talking about IT I do not know why Vivienne Ming is so focused on White Males.  Asian Males are even more over-represented than White Males in the IT industry.  Even if Asian Males are less over-represented in IT upper management roles which are even higher paying (I myself would be an exception here) they are still well over-represented in IT upper management roles relative to their share of the population.  So I do not know why she focus so much no the "cost" of not being a straight White Man and instead talk about the "cost" of not being a straight Asian Man.

I don't worship free markets as much as you obviously do.

Jaichind does have a point. It always strikes me as a little implausible that every ruthless capitalist in this world would be willing to walk away from that much free money just to satisfy their bigotry. I mean, there might be some such people but it would only take one or two evil capitalists prioritizing their own profits instead of their ideological committment to racism or sexism to fix the wage gap, if it was solely about that.

The existence of discrimination has been confirmed by multiple CV studies in many countries. But I would exercise caution in generalizing the impact of that on the macro level.

Milton Friedman made the same argument that Jaichind did.  The problem is is that behavioral economics has largely overturned his ideas since then.

Although I have no doubt that Milton Friedman knew that racism was real, when it came to sexism his view was likely that of 'we know that irrational economic behavior exists, but these irrational acts cancel each other out.'  Since then though, behavioral economics has shown that in many cases where irrational economic behavior exists, most people behave irrationally in the same way.  So, the idea that some employers would discriminate against men, while others would discriminate against women (I'm sure Friedman would never have argued that the discrimination would have been even) and that it would more or less cancel out, has been disproven.

More importantly, the concept of subtle racism or subtle sexism is also now well established.  The idea that hiring managers may not be racist or sexist, but even if they aren't aware of it, they are more likely to hire the type of people like them or that they've grown up with, or gone to university with.

So, Friedman, and by extension Jaichind are simply wrong.

On the final point, a business can engage in racism and sexism for a long time if the costs aren't prohibitive or if nearly every other business they compete with does the same thing.  In a market with perfect competition they probably couldn't do it for long, but most industries aren't perfect competition.  I agree with you and Jaichind that in the long run markets will eliminate this sort of behavior due to competitive forces, but as Keynes said "in the long run, we're all dead."

I do a lot of behavioral economics but the question here is one of magnitude. I'm not saying there is no discrimination. The question is whether it can be a huge driving force. That would require a lot of market imperfection that seems implausible, especially in a field like IT startups.

To DeadFlag, sure, I think you have a point, but to me that isn't discrimination exactly. Or, rather, I don't think your point is a defense of the position being criticized here which does have to do with manager decisions rather than structural reasons some people perform worse, internalize other norms, etc.

Vivienne Ming did NOT just research ITs.